Overview
This survey forms part of the Bank’s quantitative market intelligence gathering. It is formulated by Bank of England staff, and enhances policymakers’ understanding of market expectations. The questions involve topics that are widely discussed in the public domain, and never presume any particular policy action. Monetary Policy Committee (MPC) members are not involved in the survey’s design.
Survey respondents originate from a broad set of market participant firms, selected by the Bank based on a number of criteria, including: (i) relevant market activity in UK rates or money markets; (ii) expertise in UK rates markets and/or UK monetary policy; (iii) willingness to participate regularly in the survey and in the Bank’s market intelligence activity; and (iv) membership of one of the Bank’s external market committees.
Please contact MarketParticipantsSurvey@bankofengland.co.uk for queries or for further information.
Survey results
The survey was open from 26–28 April 2023 with responses being received from 59 market participants. For most questions, median responses across participants, along with the 25th and 75th percentiles, are reported.footnote [1] For questions that ask respondents to weight different factors or assign probabilities to specific outcomes, the mean weightings and probabilities are reported. For questions that ask respondents to select one option from a given set of possibilities – the respondent count against each option is reported.
Question 1: Expectations for Bank Rate
1a) What do you see as the most likely level of Bank Rate after the following MPC meetings? Bank Rate is currently at 4.25%.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
11 May 2023 MPC | 4.50 | 4.50 | 4.50 | 59 |
22 June 2023 MPC | 4.50 | 4.50 | 4.75 | 59 |
3 August 2023 MPC | 4.50 | 4.75 | 4.75 | 59 |
21 September 2023 MPC | 4.50 | 4.75 | 4.75 | 59 |
2 November 2023 MPC | 4.50 | 4.75 | 4.75 | 59 |
14 December 2023 MPC | 4.50 | 4.50 | 4.75 | 59 |
1 February 2024 MPC | 4.25 | 4.50 | 4.75 | 59 |
21 March 2024 MPC | 4.25 | 4.50 | 4.50 | 58 |
One year ahead (May 2024 MPC) | 4.00 | 4.00 | 4.50 | 58 |
End-2024 Q2 | 3.75 | 4.00 | 4.44 | 58 |
End-2024 Q3 | 3.50 | 3.75 | 4.06 | 56 |
End-2024 Q4 | 3.00 | 3.50 | 4.00 | 56 |
End-2025 Q2 | 2.88 | 3.00 | 3.50 | 55 |
End-2026 Q2 | 2.50 | 3.00 | 3.50 | 53 |
1bi) Please indicate the percentage chance that you attach to Bank Rate being at the following levels after the upcoming 11 May 2023 meeting. Responses should sum to a total weight of 100%. Bank Rate is currently at 4.25%. (a)
Mean probability (%) | Number of responses | |
|---|---|---|
<4.25% | 0.1 | 56 |
4.25% | 15.8 | 56 |
4.50% | 76.0 | 56 |
4.75% | 8.0 | 56 |
>4.75% | 0.1 | 56 |
1bii) Please indicate the percentage probability you attach to Bank Rate being at the following levels after the 22 June 2023 meeting. Responses should sum to a total weight of 100%. (a)
Mean probability (%) | Number of responses | |
|---|---|---|
<4.00% | 0.2 | 56 |
4.00% | 0.7 | 56 |
4.25% | 9.8 | 56 |
4.50% | 43.2 | 56 |
4.75% | 41.3 | 56 |
5.00% | 4.3 | 56 |
>5.00% | 0.4 | 56 |
1ci) What do you see as the peak level for Bank Rate in this cycle? (a)
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
Peak rate | 4.50 | 4.75 | 4.75 | 59 |
Footnotes
- (a) Note, respondents were asked whether their expected level and timing of the peak Bank Rate in this cycle was reflected in their central expectations for Bank Rate responses in question 1a. Where respondents selected ‘Yes’ their peak level was taken from those responses. 55 respondents answered the question this way. In the case where respondents selected ‘No’ they were separately asked for what they saw as the peak level for Bank Rate in this cycle with the results above being an amalgamation of these sets of responses.
1cii) And at which MPC meeting would you expect this peak to occur (month/year)? (a)
25th percentile | 50th percentile | 75th percentile | Number of responses |
|---|---|---|---|
May 2023 | June 2023 | June 2023 | 59 |
Footnotes
- (a) Note, respondents were asked whether their expected level and timing of the peak Bank Rate in this cycle was reflected in their central expectations for Bank Rate responses in question 1a. Where respondents selected ‘Yes’ their peak timing was taken from those responses. 55 respondents answered the question this way. In the case where respondents selected ‘No’ they were separately asked for what they saw as the peak timing for Bank Rate in this cycle with the results above being an amalgamation of these sets of responses.
1ciii) Please assign probabilities to the peak Bank Rate being realised at the following levels, assuming that the highest probability weighting is assigned to the peak in Bank Rate you provided in question 1a or, if applicable, question 1cii. Responses should sum to a total weight of 100%.
Mean probability (%) | Number of responses | |
|---|---|---|
At the current level of 4.25% | 8.9 | 57 |
4.50% | 35.4 | 57 |
4.75% | 31.6 | 57 |
5.00% | 16.0 | 57 |
5.25% | 4.4 | 57 |
5.50% | 2.2 | 57 |
>5.50% | 1.5 | 57 |
1d) Reflecting on your answers so far, what probability do you attach to an initial Bank Rate cut of any size occurring within the following timeframes? Note: your answers do not need to add up to 100%.
Mean probability (%) | Number of responses | |
|---|---|---|
Between now and the end of 2023 Q4 | 21.8 | 57 |
From the start of 2024 Q1 to the end of 2024 Q2 | 45.8 | 58 |
1e) With reference to your answers to 1a on most likely levels for Bank Rate, how would you describe the balance of risks surrounding your expectations for Bank Rate at the following horizons?
Count | |||
|---|---|---|---|
Between now and the one-year point | At the two-year point | At the three-year point | |
Risks skewed towards a higher path for Bank Rate | 26 | 9 | 7 |
Risks to Bank Rate path broadly balanced | 25 | 26 | 22 |
Risks skewed towards a lower path for Bank Rate | 7 | 22 | 28 |
1f) And where do you see the level of Bank Rate at which monetary policy is neither expansionary nor contractionary (often referred to as the neutral, natural or equilibrium rate) (%)?
25th Percentile | 50th Percentile | 75th Percentile | Number of responses | |
|---|---|---|---|---|
Neutral rate | 2.50 | 3.00 | 3.44 | 54 |
1g) Since the March MPC meeting, UK short rates have increased. For example, the one-year one-year forward swap rate has increased 39 basis points as of 5pm on 25 April 2023. Please weight the contributions of the following factors (%) in affecting this move in the one-year one-year forward swap rate. Responses should sum to a total weight of 100%.
Mean weighting (%) | Number of responses | |
|---|---|---|
UK specific developments | 59.9 | 57 |
Global developments | 31.3 | 57 |
Market technical factors | 8.5 | 57 |
Other | 0.3 | 57 |
Within UK specific developments please weight the following sub-factors in terms of their importance of driving these moves. Responses should sum to a total weight of 100%.
Mean weighting (%) | Number of responses | |
|---|---|---|
UK specific demand outlook | 48.2 | 55 |
UK specific supply outlook | 33.1 | 55 |
Changing perceptions about the MPC’s reaction function | 11.5 | 55 |
Other UK developments | 7.2 | 55 |
Question 2: Macroeconomic outlook
2a) Please provide the level of CPI inflation – conditioned on your Bank Rate expectations (question 1a) – you see as most likely at each of the following time horizons. For reference, the most recent CPI print for March was 10.1%.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-2023 Q2 | 7.00 | 7.50 | 8.00 | 53 |
End-2023 Q3 | 5.40 | 5.80 | 6.20 | 53 |
End-2023 Q4 | 3.50 | 3.90 | 4.88 | 54 |
End-2024 Q1 | 2.50 | 3.00 | 4.00 | 53 |
One year ahead | 2.08 | 2.70 | 3.50 | 54 |
Two years ahead | 2.00 | 2.50 | 3.00 | 49 |
Three years ahead | 2.00 | 2.00 | 2.50 | 49 |
Five years ahead | 2.00 | 2.00 | 2.50 | 50 |
2b) With reference to your answers to question 2a, how would you describe the balance of risks surrounding your expectations for CPI at the following horizons?
Count | |||
|---|---|---|---|
Between now and the one-year point | At the two-year point | At the three-year point | |
Risks skewed towards a higher path for CPI | 29 | 16 | 11 |
Risks to CPI path broadly balanced | 16 | 27 | 28 |
Risks skewed towards a lower path for CPI | 9 | 10 | 12 |
2ci) Please assign probabilities to the following rates of annual CPI inflation five years ahead. Responses should sum to a total weight of 100%.
Mean probability (%) | Number of responses | |
|---|---|---|
<=1.00% | 3.4 | 52 |
1.01%–1.40% | 6.1 | 52 |
1.41%–1.80% | 12.4 | 52 |
1.81%–2.20% | 29.2 | 52 |
2.21%–2.60% | 22.7 | 52 |
2.61%–3.00% | 16.0 | 52 |
>3.00% | 10.2 | 52 |
2cii) Please assign probabilities to the following rates of annual CPI inflation on average from five years ahead to 10 years ahead (ie analogous to the five-year five-year forward rate). Responses should sum to a total weight of 100%.
Mean probability (%) | Number of responses | |
|---|---|---|
<=1.00% | 2.8 | 47 |
1.01%–1.40% | 5.7 | 47 |
1.41%–1.80% | 13.0 | 47 |
1.81%–2.20% | 31.1 | 47 |
2.21%–2.60% | 25.7 | 47 |
2.61%–3.00% | 13.1 | 47 |
>3.00% | 8.5 | 47 |
2d) In the February 2023 Monetary Policy Report (MPR), the MPC set out its latest projections for inflation, growth and unemployment. Its baseline projections for four quarter growth in real GDP were published as: 2023 Q1: -0.3%, 2024 Q1: -0.7%, 2025 Q1: +0.2% and 2026 Q1: +0.9%. How would you characterise the profile of the economy you were assuming in formulating your expectations for Bank Rate in question 1a and CPI inflation in question 2a in comparison to the assessment in the MPR?
Count | ||||
|---|---|---|---|---|
2023 Q1 | 2024 Q1 | 2025 Q1 | 2026 Q1 | |
More optimistic on the growth relative to the MPR | 34 | 36 | 18 | 13 |
More or less in line with the assessment in the MPR | 19 | 17 | 30 | 30 |
More pessimistic on the growth relative to the MPR | 2 | 2 | 6 | 10 |
2e) The MPC’s modal projections for the Labour Force Survey unemployment rate were published in the February MPR as: 2023 Q1: 3.8%, 2024 Q1: 4.4%, 2025 Q1: 5.0% and 2026 Q1: 5.3%. How would you characterise the profile for unemployment you were assuming in formulating your expectations for Bank Rate in question 1a and CPI inflation in question 2a in comparison to the assessment in the MPR?
Count | ||||
|---|---|---|---|---|
2023 Q1 | 2024 Q1 | 2025 Q1 | 2026 Q1 | |
Lower profile for unemployment than in the MPR | 14 | 19 | 18 | 19 |
More or less in line with the assessment in the MPR | 39 | 32 | 31 | 27 |
Higher profile for unemployment than in the MPR | 1 | 3 | 5 | 7 |
Question 3: Expectations for the Bank’s balance sheet and gilt yields
3a) At its September 2022 meeting the MPC voted to begin sales of UK government bonds held for monetary policy purposes, by £80 billion over the following 12 months to September 2023 (comprising both maturing gilts and gilt sales), to a total of £758 billion. For following years, the MPC stated it intends to set an amount for the reduction in the stock of purchased gilts as part of annual reviews. Beyond September 2023, what is the annual reduction in the stock of purchased gilts, comprising both maturing gilts and active sales, that you envisage will take place over the following MPC date reference periods? (a)
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
From September 2023 until September 2024 | 80 | 80 | 80 | 47 |
From September 2024 until September 2025 | 80 | 87 | 100 | 44 |
From September 2025 until September 2026 | 53 | 80 | 80 | 44 |
From September 2026 until September 2027 | 39 | 73 | 80 | 44 |
Footnotes
- (a) Note, respondents were provided with Asset Purchase Facility redemptions (as set out in the run-off profile published in Results and usage data on the Bank’s website) corresponding to each period.
3b) What do you see is the most likely level for the 10-year gilt yield at the following points in the future (%)? Current 10-year gilt yield is 3.695% as of 5pm on 25 April 2023.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-June 2023 | 3.60 | 3.70 | 3.75 | 47 |
End-September 2023 | 3.48 | 3.60 | 3.90 | 47 |
End-December 2023 | 3.25 | 3.50 | 4.00 | 47 |
End-March 2024 | 3.00 | 3.40 | 3.76 | 48 |
End-June 2024 | 3.00 | 3.28 | 3.75 | 46 |
Question 4: Expectations for exchange rates
4a) What do you see is the most likely level for GBPUSD at the following points in the future? The level of GBPUSD as of 5pm on 25 April 2023 was 1.2398.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-June 2023 | 1.2400 | 1.2500 | 1.2500 | 46 |
End-December 2023 | 1.2200 | 1.2500 | 1.2900 | 45 |
End-June 2024 | 1.2000 | 1.2500 | 1.3000 | 44 |
4b) What do you see is the most likely level for EURGBP at the following points in the future? The level of EURGBP as of 5pm on 25 April 2023 was 0.8849.
25th percentile | 50th percentile | 75th percentile | Number of responses | |
|---|---|---|---|---|
End-June 2023 | 0.8800 | 0.8850 | 0.8900 | 44 |
End-December 2023 | 0.8800 | 0.8850 | 0.9000 | 43 |
End-June 2024 | 0.8750 | 0.8850 | 0.9000 | 42 |
Throughout, the Xth percentile is calculated by ranking the survey responses in ascending order and reporting the response which is ranked in position k where k is (X/100)*(sample size – 1) + 1. For numeric answers, where k is not an integer (ie this position lies between two responses), the result is interpolated by applying the percentile proportional to the distance between them. Discontinuous answers, such as policy meeting dates, are not interpolated. Instead, the first response which covers at least X% of the sample is reported.